28.07.2016, 17:52
Fitch Rates Greenland's USD Senior Notes Final
OREANDA-NEWS. Fitch Ratings has assigned China-based property developer Greenland Holding Group Company Limited's (Greenland; BB+/Negative) USD450m 3.875% senior notes a final 'BB+' rating.
The notes are issued by its 59.07%-owned subsidiary Greenland Hong Kong Holdings Limited (Greenland HK) under its USD2bn medium-term note programme. Greenland has granted a keepwell deed and a deed of equity interest purchase undertaking to ensure that Greenland HK has sufficient assets and liquidity to meet its debt obligations.
The notes are rated at the same level as Greenland's senior unsecured rating because they constitute direct, unsubordinated and senior unsecured obligations of the company. The final rating is in line with the expected rating assigned on 15 July 2016.
Deteriorating Financial Metrics: Greenland's leverage rose to 66% at end-2015 from 62% at end-2014 due to weaker cash collection. This level of leverage is comparable with Fitch-rated China homebuilders rated in the mid-to-high 'B' category. We believe Greenland's leverage may stay in the high-50% range even after receiving payment in 2017 for the bulk of its uncollected sale proceeds. This is because it had relied on supplier credit for its inventory build-up and this may reverse in 2017 upon project completion. Greenland's operating efficiency, as measured by total contracted sales/total debt, decreased to 1.0x in 2015 from 1.3x in 2014 due to higher debt.
The notes are issued by its 59.07%-owned subsidiary Greenland Hong Kong Holdings Limited (Greenland HK) under its USD2bn medium-term note programme. Greenland has granted a keepwell deed and a deed of equity interest purchase undertaking to ensure that Greenland HK has sufficient assets and liquidity to meet its debt obligations.
The notes are rated at the same level as Greenland's senior unsecured rating because they constitute direct, unsubordinated and senior unsecured obligations of the company. The final rating is in line with the expected rating assigned on 15 July 2016.
Deteriorating Financial Metrics: Greenland's leverage rose to 66% at end-2015 from 62% at end-2014 due to weaker cash collection. This level of leverage is comparable with Fitch-rated China homebuilders rated in the mid-to-high 'B' category. We believe Greenland's leverage may stay in the high-50% range even after receiving payment in 2017 for the bulk of its uncollected sale proceeds. This is because it had relied on supplier credit for its inventory build-up and this may reverse in 2017 upon project completion. Greenland's operating efficiency, as measured by total contracted sales/total debt, decreased to 1.0x in 2015 from 1.3x in 2014 due to higher debt.
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